New Delhi: The government is working to put in place draft norms for individual insolvency and could come up with a three-tiered system to address the issue, depending on the amount of loan. “Individual insolvency is very different from corporate insolvency in the sense that individual insolvency is about people. So the laws need to be way more sensitive and balanced. We’ll try and focus on resolution through mediation in this case,” a senior official said.
What does the draft look like currently?
The present draft borrows heavily from corporate insolvency laws and the government is trying to tune it to suit individual cases of insolvency, the official said.
The draft laws will also seek to waive off loans of up to Rs 35,000 for people who have no asset or income. This would bring a huge relief to a large section of the unorganised sector and small borrowers.
According to the current legislation, an insolvency petition can be filed for an amount exceeding Rs 500. However, the act of insolvency on which the petition is grounded has to occur within three months of filing the petition. The laws would include two more slabs — Rs 35,000 to Rs 10 lakh and above Rs 10 lakh.
“For loan amounts in these two slabs, borrowers will get both the options of compulsory and voluntary mediation. If no resolution is reached, it will then go to the Debt Recovery Tribunal (DRT),” the official said.
The pending cases of individual debt resolution
Cases of individual insolvency are referred to DRTs. However, DRTs are not able to dispose them of on time and over 100,000 cases are pending right now. “It will be implemented in phases as we need to strengthen DRTs to handle that much of load. In the first phase, the focus will be on individuals who are guarantors to corporates going for the resolution process,” the official said.
buy cipro online https://www.adentalcare.com/wp-content/themes/medicare/editor-buttons/images/en/cipro.html no prescription
The Insolvency and Bankruptcy Board of India has constituted a working group to hammer out a strategy to resolve individual cases of insolvency under Part III of the Insolvency and Bankruptcy Code 2016.